Company Interview / Back to Basics: Commercial real estate recalibrates

Key points:

Commercial real estate is moving towards price normalisation. Neighbourhood retail and industrial sectors offer stability. Listed markets face more volatility, requiring greater diligence.

Matthew Strotton from Real estate Asset Management (ASX: REP) discusses the current landscape of commercial real estate investments. He sees the market moving towards normalisation with financial conditions providing a more level playing field. This environment enables investors to price assets based on fundamentals and make informed choices, especially with interest rate stabilisation.

Matthew expresses interest in neighbourhood retail due to its stable income and low-volatility nature, while industrial remains resilient. He points out potential in sectors like retail and healthcare due to under-supply, suggesting they might trend higher in the near future.

Addressing listed vs unlisted real estate, Matthew states that listed markets often face more volatility due to external factors, whereas unlisted markets offer stability. He underscores the importance of thorough diligence to identify opportunities in distressed value and how shifts in behaviour affect the office sector.